Everything in the world is subject to the 80/20 Principle.
The 80/20 Principle is something I’m really passionate about, and many people use it to achieve success in multiple areas of their life.
Vilfredo Pareto, an Italian economist, discovered this principle in the early 1900s. He realized that 80% of the wealth in England was held by 20% of the population.
But it was recently made much more popular by author Richard Koch.
He realized that the 80/20 principle didn’t just apply to wealth… it applied to everything.
20% of freeways get 80% of the traffic.
20% of customers make 80% of the purchases.
20% of tennis players win 80% of the competitions…
And as you probably know, 99% of the wealth in America is held by 1% of the population.
When Koch stumbled upon this discovery, he began to apply the 80/20 principle to his life and work.
It’s the reason he was able to go from working 60 hours a week as a management consultant making six figures…
…to being worth $400 million while working just one hour per day.
His approach is all about “less is more”…
And this same philosophy can be applied to your trading.
I know that sounds extreme and maybe even hard to believe. But it’s true.
And thankfully, Koch teaches his 80/20 ways in his book “The 80/20 Principle: The Secret To Achieving More With Less.”
That said, you don’t need to go read the book…
Because I’m going to explain his magic formula for achieving more with less right here.
You see, there’s a 3-step system you can use to achieve any goal.
Our goal of course, is winning as many trades as possible.
Step 1: The 80/20 Destination – where you want to be.
Step 2: The 80/20 Route – the easiest way to the destination.
Step 3: The 80/20 Actions – the first key steps.
Follow the steps in this simple order and you’ll achieve any goal, even exceed your goal… while doing less actual “work”, or in our case, less screen time.
Let’s apply this model to trading.
- What’s your 80/20 destination? To win as many trades as possible, while generating the most profit you can.
- What’s your 80/20 route? Being able to identify when volume is pushing the price, and in which direction the price is moving (up or down). This is the closest there is to predicting what price is most likely to do, and it will help you decide where to invest, when to make an entry, and if you should go long or short.
- What are your 80/20 actions? An easy to understand step-by-step process that helps you identify when and how price is going to move (You can check out my process in the link below).
If you want to know the 3 steps I follow that account for 80% of my results (in other words… the 80/20 solution to trading), which you can easily follow as well…
I hope you find the 80/20 path to be an eye-opening way of looking at things. It’s amazing how much it can help you achieve your goals in anything in life.